Multi-million dollar makeovers fail to draw crowds at posh malls

Asset enhancement initiatives are no longer sure-win solutions.

Prime retail rents in Singapore crashed to a 10-year low in the third quarter, with average prime first-storey rents slipping 3.7% quarter-on-quarter to just $30.9 per square ft in Q3.

According to DTZ, this is the lowest average monthly rent recorded since the first quarter of 2006, and the fall can be largely attributed to weaker consumer sentiments and slower retail sales.

While malls have previously relied on asset enhancement enhancement initiatives (AEIs) and tenant rejuvenation schemes in order to improve shopper traffic, DTZ warned that these tried-and-tested methods are unlikely to work in today’s extremely competitive retail landscape.

“Rejuvenation of tenant mix and AEIs are no longer sure-win solutions to ensuring sustainable foot traffic. Rather, these initiatives have become part and parcel of a natural cycle that malls have to go through to keep abreast of ever-changing consumer trends,” said Anna Lee, DTZ’s Director of Retail.

Instead of undergoing AEIs, malls need to roll out interesting events and tempting offers in order to draw shoppers, Lee added.

For instance, Paragon held an Infiniti Showcase event from 15 to 23 September that was in conjunction with the Formula 1 Singapore Grand Prix from 18 to 20 September. 

The event featured several award-winning show cars as well as an F1 simulator, which was able to garner public interest due to the event’s proximity to the F1 race.

Rents in the other city areas, which include retail spaces in Marina Centre, City Hall and the CBD, declined the most by 4.5% q-o-q to about $22.10 per sq ft in Q3 2015. 

On the other hand, average prime first-storey rents in Orchard/Scotts Road slipped by a smaller percentage of 3.5% q-o-q to $38.45 per sq ft. 

As compared to the other city areas, rents in Orchard/ Scotts Road was more resilient as the area remains highly sought after by many international brands.

Similarly, prime first-storey monthly rents in the suburban areas fell by 3.5% q-o-q to $32.10 per sq ft in Q3.